Is There a Future for the North's Public Services?

A child learning geography in the 1960s would quickly associate a map of Britain with the stuff that was produced in different places.

Here were the coal towns, in places like Barnsley, Easington in Durham or the south Wales Valleys. Here were the places that made steel, like Sheffield and Scunthorpe. Here were the mill towns that dealt in cotton and textiles, from Bradford to Burnley. And scattered across the UK were the market towns, where local produce was sold and distributed.

These days you can still trace those local products through the nicknames of football teams (Walsall are the Saddlers, Southend United the Shrimpers) and through the plethora of institutions like Stockport's Hat Works museum. By and large, though, they play a diminishing role in local economies. Service industries, from retail to insurance, are the nation's biggest employers.

The problem is that neither services nor construction nor manufacturing employ enough people at high enough wages any more to create the local tax base that once paid for our Victorian town halls and public works. Look at the maps of England and many of the towns that once produced the nation's wealth now have the highest rates of unemployment and reliance on public services.

The rapid de-industrialisation of the 1970s and 1980s was coupled with increased sourcing of manufactured products and foodstuffs from around the world at what seemed like bargain prices. But the costs of that bargain are now coming home: as productive capacity continues to fall, the availability of cheap commodities and goods is being sqeezed.

This is a particular challenge for the north of England. The economy has been centralised in the belief that what we are really good at these days is making money from money: since the banking bubble burst in 2008, that myth has been exposed. A flatlining economy creates a vicious circle of falling tax revenues, rising borrowing, and draconian spending cuts designed to balance the books. Government visions of investment seldom extend to much more than bunging big contracts at the construction industry.

A new report from the Smith Institute asks how the public services that the north of England depends on can survive this maelstrom. Its findings are sobering. As Michael Ward, the author, explained at this week's launch: 'The economic position is more serious than in 2010 and the options that may have appeared in 2010 no longer exist.' There will be no 'sunlit uplands' to look forward to after austerity.

Current spending plans will see a continued haemorrhaging of support from the areas that most rely on it. Policies such as the 'new homes bonus', which rewards councils for permitting new building, and shifting responsibility for council tax benefit to local authorities while cutting the resources available to pay it, effectively act as a redistribution from poorer areas to wealthier ones.

Against such a bleak backdrop, public services in the north will need to adapt or die. While the report praises some councils for innovative thinking and good practice, much more is needed to make services more productive, intervene earlier to prevent problems, and cooperate to avoid duplication.

Ward rightly points out that a fairer distribution of resources will help, but will not solve the long term problems. He calls for a 'new deal' for northern public services, rooted in 'the core public services values of altruism, integrity, quality, and provision based on need rather than the ability to pay'.

Rather than wait for central government to solve the problems, a new forum called Public Services North should be created to develop home-grown solutions. 'Northern public service providers must take the lead in shaping their own destiny,' he argues.

But that brings us back to the beginning. That destiny can only be shaped locally on the back of local productivity, which is a long term challenge. In the short term, though, it becomes more vital to spend public and private resources in ways that support local economies, linking local producers with markets.

That's why buying from independent producers before supermarkets matters; it's why public service contracts should seek to create local value and strengthen local supply chains; and it's why politicians of all parties need to rediscover a pride in local democracy, instead of seeking to use it as a fast track to Westminster. Who's going to take the lead?